Monday, September 1, 2014

Labor Day: America needs a full employment agenda

Editorial reprinted from the NYTimes

In the
months before Labor Day last year, job growth was so slow that economists said
it would take until 2021 to replace the jobs that were lost or never created in
the recession and its aftermath.

The pace has picked up since then; at the
current rate, missing jobs will be recovered by 2018. Still, five years into an
economic recovery thathas been
notable forresurgingcorporate profits,
the number and quality of jobs are still lagging badly, as are wages and
salaries.

In 2013, after-tax corporate profits as a
share of the economy tied with their highest level on record (in 1965), while
labor compensation as a share of the economy hit its lowest point since 1948.
Wage growth since 1979 has not kept pace with productivity growth, resulting in
falling or flat wages for most workers and big gains for corporate coffers,
shareholders, executives and others at the top of the income ladder.

Worse, the
recent upturn in growth, even if sustained, will not necessarily lead to
markedly improved living standards for most workers.

That’s because the economy’s lopsidedness
is not mainly the result of market forces, but of the lack of policies to
ensure broader prosperity. The imbalance will not change without labor and
economic reforms.

For instance, newresearch
from the Economic Policy Instituteshows
that from the first half of 2013 to the first half of 2014, hourly wages,
adjusted for inflation, fell for nearly everyone. An exception was a small gain
for the bottom 10 percent of wage earners, which was because of minimum-wage
increases in 13 states this year.

That’s clear evidence that raising the
federal minimum wage, while only a first step toward better pay, would have a
powerful effect. A lift from the current $7.25 an hour to the modest $10.10
called for by President Obama and Democrats in Congress would put an estimated
additional $35 billion in the pockets of affected workers over a three-year
phase-in period.

Unionization
is also associated with higher wages and benefits, especially for low-wage
workers, which argues for greater legal enforcement of the right to organize
without retaliation.

Similarly,
stronger enforcement of both labor laws and antitrust laws is needed to ensure
against wage theft. Once assumed to be mainly an issue of unpaid overtime or
other wage violations, wage theft became a white-collar issue this year, when
itwas
revealedthat collusion
among the biggest companies in Silicon Valley had suppressed the pay of
software engineers by an estimated $3 billion.

The pay of middle-income workers has also
been diminished. Decades of outsourcing government jobs to the private sector
has undercut public employment, once a mainstay of middle-class life, even asevidencehas mounted that outsourcing often
does not save money or improve services. What’s needed is a systematic review
of government contracts with the private sector and a willingness to end those
that are counterproductive.

Another threat to middle-class wages is
rampant misclassification — of employees as independent contractors and of
workers as supervisors — a tactic that employers use to deny pay and benefits
that would otherwise be due. In a promisingdevelopment,
a federal appellate court recently ruled that drivers for FedEx in California
are employees, not independent contractors, an example of the courts stepping
in when the other branches of government have let an injustice persist.

There has been progress since last Labor
Day. Mr. Obama has signed executive orders to improve thepayandworking
conditionsof
employees of federal contractors. The Labor Department is revisingrules on
overtime pay; simply updating them for inflation would make millions
of additional workers eligible for time-and-a-half for overtime.

What is still lacking, however, is a
full-employment agenda that regards labor, not corporations, as the center of
the economy — a change that would be a reversal of the priorities of the last
35 years.